So, just as enterprise adoption of Web 2.0 has picked up, the VCs decide to stop funding it. Does this make sense?

It does if we assume that VCs invest in early stage bubbles, not the later-stage mainstream. VCs got into the early stage consumer Web 2.0 party, following early insight from Tim O'Reilly, but seem to be forgetting that the real money will be made in the later-stage, boring enterprise adoption of Web 2.0. Tim O'Reilly watches the "alpha geeks" to see where markets are going long-term; I watch the "alpha consumers" to see where the money is in the short-term.

As a case in point, Tim stopped worrying about open source years ago. It's old news now. But that old news is selling incredibly well into the enterprise. Tim saw it years before anyone else, but those who are building businesses in open source now are reaping the harvest.

Web 2.0 is the same, and VCs would do well to remember that the mainstream majority has a lot more cash than the early adopters. Web 2.0 is just now hitting its stride as it becomes boring and mainstream.

About the author

Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.
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